Correlation Between Electromed and Adapthealth Corp

Can any of the company-specific risk be diversified away by investing in both Electromed and Adapthealth Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Electromed and Adapthealth Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Electromed and Adapthealth Corp, you can compare the effects of market volatilities on Electromed and Adapthealth Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Electromed with a short position of Adapthealth Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electromed and Adapthealth Corp.

Diversification Opportunities for Electromed and Adapthealth Corp

-0.73

Correlation Coefficient

Electromed  Adapthealth Corp

Pay attention - limited upside

The 3 months correlation between Electromed and Adapthealth is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and Adapthealth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adapthealth Corp and Electromed is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Electromed are associated (or correlated) with Adapthealth Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adapthealth Corp has no effect on the direction of Electromed i.e., Electromed and Adapthealth Corp go up and down completely randomly.

Pair Corralation between Electromed and Adapthealth Corp

Given the investment horizon of 90 days Electromed is expected to generate 0.92 times more return on investment than Adapthealth Corp. However, Electromed is 1.09 times less risky than Adapthealth Corp. It trades about 0.27 of its potential returns per unit of risk. Adapthealth Corp is currently generating about -0.04 per unit of risk. If you would invest  1,823  in Electromed on September 13, 2024 and sell it today you would earn a total of  1,058  from holding Electromed or generate 58.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Electromed  vs.  Adapthealth Corp

Electromed

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Electromed are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting primary indicators, Electromed exhibited solid returns over the last few months and may actually be approaching a breakup point.

Adapthealth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adapthealth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Electromed and Adapthealth Corp

The main advantage of trading using opposite Electromed and Adapthealth Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electromed position performs unexpectedly, Adapthealth Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Adapthealth Corp will offset losses from the drop in Adapthealth Corp's long position.

The idea behind Electromed and Adapthealth Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.